SUNY ends talks with Peebles to buy LICH; Fortis next up

SUNY ends talks with Peebles to buy LICH; Fortis next up

In a stunner on Wednesday, SUNY rejected bidder Peebles. The ER at LICH is still open, while SUNY begins negotiating with Fortis. Photo by Mary Frost

Another Long Island College Hospital bidder out of contention

By Mary Frost

Brooklyn Daily Eagle

Another bidder for Long Island College Hospital (LICH) has been rejected by SUNY.

Late Wednesday, the State University of New York (SUNY) announced it has ended negotiations with the Peebles Corporation in its bid to buy LICH. Peebles came in second in a contested RFP after Brooklyn Health Partners (BHP), also rejected by SUNY.

SUNY said they will immediately begin negotiations with Fortis Property Group, LLC -- the same developer SUNY awarded LICH to in their first RFP round. Fortis bid $240 million for LICH.

On Thursday the Fortis team said in a statement, "We are pleased that we have been given the opportunity to enter into negotiations with SUNY regarding the Long Island College Hospital project. Our team is ready, willing and able to ensure that there is a continuity of care that provides the people of Brooklyn with world-class healthcare. The team consisting of Fortis Property Group, NYU Langone Medical Center, Lutheran HealthCare, L&M Development Partners, and Full Spectrum NY has a long and successful history in Brooklyn and is excited for this opportunity."

SUNY says Peebles changed proposal

SUNY says Peebles, like BHP before it, promised services that it couldn’t deliver.

Peebles attorneys told state Supreme Court Justice Johnny Lee Baynes on May 21 that their proposal called for SUNY to run LICH’s emergency department for just a short period of time under SUNY's license, and then transition it to Peeble’s health care partner North Shore-LIJ. North Shore was to take over the ER’s management and staffing by July 1, and obtain an operating license by the end of the summer.

In a letter on Tuesday, however, Peebles told SUNY that, because of an issue with the tax-exempt status of PIT bonds that encumber the emergency department, “it is clearly in SUNY’s and the State’s best interest to maintain SUNY’s license in effect till closing [in six months].

SUNY has been adamant that it does not intend to run LICH’s ER for that length of time. In a May 28 letter to Peebles obtained by the Brooklyn Eagle, Ruth E. Booher, SUNY’s Deputy Counsel for Health Affairs, told the developer, “Instead, your client proposes that SUNY not exit but rather continue to provide care, bearing the cost of facility malpractice, for at least six months and possibly indefinitely based on your client’s request for extensions of the closing. This is unacceptable.”

SUNY also says that Peebles is trying to hook taxpayers into sharing the cost of environmental remediation on the LICH campus.

According to the Request for Proposals (RFP), the LICH property “will be disposed of in ‘As Is’ condition.”

Peebles told SUNY on Tuesday that it wants access to the property to perform environmental testing, and suggested a “mutually-satisfactory cost-sharing arrangement to cover required remediation costs.”

“The environmental provisions of the RFP were clear and unambiguous,” SUNY's Booher told Peebles in the letter. “Your proposal for a ‘cost-sharing arrangement’ . . . is an attempt to impose a condition on the purchase price. This is also unacceptable.”

SUNY spokesperson David Doyle said in a release on Wednesday that SUNY "has been negotiating in good faith over the past several weeks to finalize an agreement with The Peebles Corporation. As demonstrated by our continued voluntary operation of the emergency department at LICH, SUNY takes seriously its commitment to reaching an agreement that provides continuity of health care services.

"But the final transaction must also adhere to the RFP," he said. "Unfortunately, several portions of the Peebles proposal have dramatically changed, including the possibility of long delays in the manner and method in which health care will be provided at the site. Additionally, Peebles is seeking a cost-sharing agreement in which taxpayers would be partially responsible for environmental remediation, which is far outside the scope of the RFP. These deviations from the initial proposal are unacceptable to SUNY from both a health care and business perspective."

According to their proposal, Fortis Property Group is working with NYU Langone Medical Center and Lutheran Health Care to deliver a "free-standing ER" and ambulatory services, but, like Peebles, is not offering a full-service hospital. Lutheran HealthCare would provide clinical services in the LICH catchment area.

Justice Baynes indicated during a recent hearing, however, that Fortis may have beefed up their medical offerings.

Fortis plans rental, condo and town home development, with 25 percent affordable. When they submitted their proposal, Fortis said no new zoning was anticipated.

Peebles says SUNY acted in ‘bad faith’

Peebles Corp. protested on Wednesday that SUNY is “mischaracterizing” the issues. “SUNY wanted Peebles to indemnify them for environmental issues without allowing them to test the site beforehand, which is common business practice."

“Let it be clear that SUNY has acted in bad faith and has not spoken or agreed to a meeting since Peebles signed a deal with the community,” a Peebles spokesperson said. “Several requests have been made and nothing has been returned but today’s letter."

In a letter, Peebles’ attorney Meredith Kane told Booher, “We were surprised and dismayed by what we consider to be numerous inaccuracies in the portrayal of the issues in your letter, particularly in light of our team’s enormous efforts since our designation to assist the State in achieving a transaction with major public and community healthcare benefits in difficult circumstances.”

Kane said that Peebles believes that “each of the open issues you cite” can be resolved “in a manner that is responsive to the concerns of SUNY and the State, is in keeping with the spirit and the letter of the commitments we have made to the community, is protective of your interests, is fully within the letter and the spirit of the RFP, and is commercially reasonable.”

The Peebles' spokesperson said that developer Don Peebles was not yet certain if he will be challenging SUNY's decision.

While most of the Cobble Hill hospital has been closed, SUNY had agreed to keep the ER open while negotiating with Peebles. SUNY said on Wednesday that this arrangement would continue.

"Even though the settlement agreement allowed SUNY to close on May 22nd, we will continue our best efforts to staff and maintain current services at the emergency department while we negotiate with Fortis. SUNY will continue to pursue in good faith a final deal that provides continued health care services for the Cobble Hill community but also protects the financial interests of state taxpayers and our students."

Jill Furillo, President of the New York State Nurses Association (NYSNA), said in a statement, "NYSNA will continue to work to keep LICH open for care. SUNY has an obligation to ensure that there is credible and committed continuity of services that meet the healthcare needs of the communities served by LICH."

LICH nurse Julie Semente added, "As we have been saying for more than a year and a half, the NYSNA nurses of Long Island College Hospital stand ready to negotiate with any potential new operator who is willing to continue vital services at the site of LICH, for our patients and this community. Continuation of quality hospital services for our patients, without interruption, has been & remains our number one priority."

"I'm stunned but not surprised," said Susan Raboy, spokesperson for the advocacy group Patients for LICH. "We all knew this was going to happen. SUNY always wanted Fortis." She added, however, "I am scared we're not going to end up with any medical service at all."

May 28, 2014 - 5:48pm

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